What happens if America defaults on its debt?
An unimaginable eventuality becomes all too imaginable
The American constitution vests legislative power in Congress. Over the coming days the political body may arrogate to itself a metaphysical power: transforming the utterly unthinkable into hard reality. By failing to raise America’s debt ceiling in time, Congress could drive the country into its first sovereign default in modern history. A collapse in stockmarkets, a surge in unemployment, panic throughout the global economy—all are firmly within the realm of possibility.
This article appeared in the Finance & economics section of the print edition under the headline “Nightmare scenario”
Finance & economics May 27th 2023
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